VA's budget request includes $30.2 billion for health care and other discretionary funding and $33.4 billion for disability compensation, pension and other entitlement programs. The request includes $225 million for new construction. Funding for fiscal 2004 health care is 7.7 percent higher than the fiscal 2003 level, the largest requested increase in VA history, Principi said.

The secretary also suspended new enrollments by veterans in Priority Group 8, the one with the lowest statutory priority. This group includes veterans who are not being compensated for a military-related disability and who have "higher incomes," generally about $30,000 or more.

Group 8 veterans who were enrolled by Jan. 17 are "grandfathered" and can continue receiving VA health care.

He said he suspended Group 8 enrollments to ensure VA has capacity to care for veterans with military-related disabilities, lower-income veterans, and those with special needs, such as blind veterans and those with spinal cord injuries.

VA and the Department of Health and Human Services, he said, are working to give Priority Group 8 veterans aged 65 or older access to a "VA+Choice Medicare" plan if they can't enroll in the VA health care system.

The plan calls for VA to participate as a Medicare+Choice provider. Eligible veterans would be able to use their Medicare benefits to obtain care from VA. In return, VA would recoup costs through payments from a private health plan contracted by Medicare. The plan could become effective later this year.

"HHS is happy to join the Department of Veterans Affairs in developing this new option for veterans who might otherwise be unable to obtain health care through the VA," said HHS Secretary Tommy G. Thompson. "This is a creative marriage of our federal health programs to serve our veterans efficiently and effectively."

VA officials said they've been unable to provide all enrolled veterans with timely access to VA health care. They cited stresses on the VA system caused by "tremendous growth" in the number of veterans seeking care.

Since 1996, VA health care enrollment more than doubled from 2.9 million to 6.8 million today. In fiscal 2002 alone, 830,000 veterans enrolled -- and more than half were in Priority Group 8. Officials said they expect that trend to continue. But even with the suspension, they said, a projected 380,000 veterans in the seven higher priority groups will enroll in fiscal 2003.

"Last year, VA treated 1.4 million more veterans with 20,000 fewer employees than in 1996," Principi said. "Nonetheless, VA leads the nation in many important areas like patient safety, computerized patient records, telemedicine, rehabilitation and research. I not only want to see this standard continue, I intend to see it get even better."

"With this record budget increase, I expect access to medical facilities for severely disabled veterans to improve, along with a reduction in waiting times for all veterans," he said.